What do retirees, teachers and low income workers have in common? They are all among the patrons of the pay day loan industry. Call them 'short term lenders' or what ever you wish - they are among the terms used to describe pay day loan, auto title loan, pawn shops, check cashing stores (I've even seen a 'tire rental' store), which proliferate in minority, low income to working class neighborhoods. Most refer to them as predatory lenders.
"If not for the behavior or the banks, their industry would not be nearly so robust. The banks abandoned lower income neighborhoods starting thirty years ago, creating the vacuum that the country's check cashers filled. The steep fees the banks charge on a bounced check or overdue credit card fuels a lot of the demand for payday advances and other quick cash loans. The big Wall Street banks had stepped in and provided money critical to the expansion plans of many in the room, but never mind: These entrepreneurs selling their financial services to the country's hard-pressed sub-prime citizenry are nothing if not opportunistic. The nation's narrative, they argued, was theirs."
'Broke USA' is an incredible story of how low income, working class, predominately minority communities are targeted by this industry. In Dallas, a group of churches are working to address the problem in their neighborhood - a reaction to members who tell tales of being mired in debt during financially vulnerable circumstances. It's an issue that's the subject of my latest column in the Dallas Morning News.